Broker-dealer LPL was fined $400,000 by FINRA for failing to implement and maintain adequate procedures to ensure timely delivery of mutual fund prospectuses to its customers. LPL is required by the federal securities laws to deliver a prospectus within 3 days to any customer purchasing mutual fund shares. FINRA found that LPL’s procedures did not require an adequate review of whether its brokers were delivering prospectuses and had no mechanism in place to determine if prospectuses were delivered late. In addition, since 2007, LPL was allegedly aware that its procedures were inadequate but on at least two occasions considered and rejected proposals to amend its procedures. Four other firms also received fines for failing to timely deliver prospectuses and failing to establish adequate supervisory systems and written procedures for deliveries: State Farm VP Management was fined $155,000, Deutsche Bank Securities $125,000, Scottrade $50,000 and T. Rowe Price Investment Services $40,000.
